$300 A Month In These 3 Stocks Could Make You A Retired Millionaire


The power of compounding works better the longer you are able to keep your money invested. If you have decades to go before you retire, investing just $300 a month at a 10% annual rate of return for 35 years would boost that small starting amount to just over $1 million. And with more brokers allowing investors to buy fractional stocks, you don’t need to feel limited if the stock you want to buy is trading for more than the money you have.

Past performance is no guarantee of future results, but investing $100 a month in each of these three dividend-paying stocks has a good chance of making you a millionaire if you’re a few decades old.

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1. Aflac

The First Stock to Consistently Spend $100 a Month on Purchase Is Top-Up Insurer Aflac (NYSE:AFL). Over the past 10 years, Aflac shareholders who have reinvested their dividends have earned 14.1% on an annual basis – just before the S&P500is 13.7%. A one-time investment of $1,000 10 years ago would have nearly quadrupled to $3,700 during that time with dividends reinvested.

And unlike the S&P 500, which appears to be somewhat richly priced today at a forward P/E ratio of around 22, Aflac is trading at a forward P/E ratio of just 12 at recent prices. Additionally, Aflac is priced at a moderate discount to the industry average P/E ratio of around 14. This is despite Aflac being the only stock in its peer group that has increased its dividend every year for almost of four consecutive decades, which comfortably makes him a dividend aristocrat.

Analysts expect growing demand for Aflac’s life, disability, cancer, dental and vision insurance products to drive 4% annual growth in earnings per share (EPS) over the next five years. That actually seems like a low estimate based on the company’s annual earnings growth rate of 10% over the past five years. Not to mention the fact that Aflac will soon earn higher income on its $146 billion investment portfolio when the Federal Reserve begins raising interest rates later this year.

And while shareholders keep their shares of Aflac, they enjoy a dividend yield of 2.5%, above the market. And with a relatively low payout ratio of 30.2%, Aflac should have the ability to steadily increase its dividend in the years to come. These factors make Aflac an excellent dividend-paying stock to buy for the long term.

2. General dynamics

The next stock to allocate $100 per month to is the Defense and Aerodynamics Contractor’s Stock General dynamics (NYSE:GD), which has increased its payouts for 30 consecutive years. Over the past decade, General Dynamics has generated annual returns of 14.3% with dividends reinvested. A single $1,000 investment in General Dynamics around this time in 2012 would have grown to almost $3,800 now with dividends reinvested.

Since the dawn of time, human conflicts between countries and territories have unfortunately been a constant. The onset of the information age hasn’t changed that – it just changed the way battles are fought. As the government’s largest information technology (IT) provider, General Dynamics will play a critical role in the US government’s efforts to defend against the threat of cyberattacks over the long term. The United States recently increased its defense spending by 5% to $768 billion.

Bipartisan recognition of the need to increase defense spending to deal with geopolitical enemies should bode well for General Dynamics. That’s why analysts expect General Dynamics’ EPS growth to accelerate from 7% annually over the past five years to 9% over the next five.

Investors can lock in General Dynamics’ 2.2% dividend yield at a forward P/E ratio of just 17 at recent prices, which is arguably a reasonable price to pay for the stock’s growth potential. This is especially true given that General Dynamics’ payout ratio will likely be in the low 40% range this year, giving the stock plenty of room for future dividend growth.

Do you remember what I said above about fractional shares? A hundred dollar investment will only buy about half of a General Dynamics stock at recent prices, so make sure your broker allows fractional stock trading.

3. Amgen

The third and final stock to set aside $100 each month to buy is pharmaceutical stock. Amgen (NASDAQ:AMGN). Over the past 10 years, Amgen has generated annual returns of 16.2% before considering dividend reinvestment. A $1,000 investment 10 years ago would have grown to almost $4,500 without even reinvesting the dividends.

And Amgen’s tremendous comebacks over the past decade are set to continue. This is due to the fact that global pharmaceutical expenditure is expected to rise from $1.27 trillion in 2020 to $1.60 trillion by 2025, which is expected to act as a rising tide that lifts the proverbial Amgen boat. Along with Amgen’s track record of innovation, that’s why analysts predict annual earnings growth of 5% over the next five years for the stock.

Given that Amgen’s dividend payout ratio will be around 43% for this year, the company should be able to build on its 10-year streak of increasing its dividend. Even better, the stock’s strong growth prospects can be bought at a reasonable forward P/E ratio of just 13. Combining Amgen’s mid- to upper-single-digit annual dividend growth potential with its yield the market-crushing 3.3% dividend makes the stock an attractive stock. long-term selection.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.


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